International Business Exam 1

-barriers to trade
-barreirs to foreign direct investment
-transportation costs
-economic and political risk

Industrial goods, goods that serve a universal need
-aluminum, oil, wheat, jet aircrafts...

Merging of historically distinct and seperate national markets into 1 huge global marketplace

Sourcing of goods & services from locations around the globe to take advantage of national differences in the cost & quality of factors of production
- lower company's overall cost structure

International treaty committed to lowering barriers to the free flow of goods across national borders

Polices world trade system & makes sure nation-states adhere to rules

Lends to countries whose econoies are in turmoil, in return require them to adopt certain economic policies

Set up to promote economic development, by offering low-interest loans to cash-strapped gov'ts of poorer nations

-decline in barreirs to the free flow of goods, services & capital since the end of WWII
-technological change (communication, info. processing, transportation technologies)

Any business that has productive activities in 2+ countries

-lower prices
-stimulates economic growth
-raises incomes in consumers
-creates jobs
-countries specialize in goods & services
-outsource - prices can go down
-technology has had bigger impact on loss of unskilled jobs than globalization

-manufacturing job loss in wealthy countries
-downward pressure on wage rate of unskilled workers in advanced countries
-environmental degredation
-culutural imperialism, loss of sovereignty
-move to countrires w. fewer labor & environmental regulations

(1) countries are different
(2) range of problems is wider and more complex
(3) must work w.in limits of international trade & investments
(4) international transactions require converting currencies

Cultural Distance
-languages, ethnicities, religions, social norms

Administrative Distance
-monetary or political differences, political hostilities, weak legal and financial institutions